Airline’s President Tim Clark says full merger unlikely ‘but up to owners’; Procurement could be one area of cooperation

Reuters

13:46 October 11, 2017

Singapore: Emirates is open to cooperation with rival Etihad Airways on areas including procurement, its president Tim Clark said on Wednesday, adding a full merger between the pair was unlikely but up to the owners.

Based in the UAE, Emirates and Etihad have been competing fiercely to build global networks around their respective hubs in Dubai and Abu Dhabi rather than working together, even as they battled overcapacity, security concerns and a fall in regional business travel.

“I think there is value to be had working more closely with them,” Clark told Reuters by phone, adding there might be concerns from regulators in some foreign markets.

“There are many areas that the airlines could work together on like procurement. But we have to go the first jump first to understand what it is we could do and I’m simply the manager of one of the businesses,” he said.

“It is my superiors who have to make that call, not me.” When asked if the pair could pursue a merger along the lines of Europe’s Air France and KLM, Clark said: “I don’t think that will be the case but it is not my call really. It is whatever [the shareholders] may do in the future.” Emirates is owned by the Dubai government while Etihad is owned by the Abu Dhabi government.

Etihad, which has been hit hard by loss-making investments in European carriers Air Berlin and Alitalia, last month said it would appoint Britain’s top defence buyer, Tony Douglas, as its new CEO from January as the airline rethinks its aggressive global expansion strategy.

Etihad could not immediately comment on possible cooperation with Emirates.

Emirates order plans

Emirates, a bigger airline than Etihad, is the largest customer for the Airbus A380 that has had its production rate cut due to a lack of sales.

Clark said an order for more of the superjumbo aircraft was under consideration, adding that any A380 order would help replace 25 A380s due to be retired in the middle 2020s.

He did not give any details on the order volume or whether a deal would be signed at the Dubai Airshow next month.

“Airbus would love us to do that but we’ve got a few things to sort out first so I’m not sure that we’ll get there for the air show,” he said.

The airline is separately looking at the Airbus A350 and the Boeing Co 787 to meet its needs in the 250-300 seat market, Clark said, after having told Aviation Week only last month that a planned order was “off the table for now”.

In 2014, Emirates cancelled an order for 70 A350s.

Clark said the Emirates procurement and operational groups were engaging with both manufacturers about a potential order.

“I don’t want to focus on the Dubai Airshow,” he said of the timing. “The important thing is to get the right deal for the company at the time that suits us, not driven by a guillotine of the middle of November.”